Exhibit D(6)
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "AGREEMENT") dated as of _______ __,
2002, is by and among Syngistix, Inc., a Delaware corporation (the "COMPANY")
with principal offices at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000, and the parties listed on the attached SCHEDULE 1 (each, a
"PURCHASER" and collectively, the "PURCHASERS").
RECITALS
A. The Company has authorized the sale of $10,000,000 in principal
amount of its secured notes (each, a "NOTE" and collectively, the "NOTES").
B. Each Purchaser wishes to purchase a Note with a principal amount as
set forth opposite such Purchaser's name on the attached SCHEDULE 1, on the
terms and subject to the conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings indicated whenever used
herein:
"CHARTER DOCUMENTS" shall mean the Company's Certificate of
Incorporation, any certificate of designation and Bylaws, together with all
amendments to any of the foregoing.
"CITRUS" shall mean Citrus Merger Corp., a Florida corporation and a
wholly-owned subsidiary of the Company.
"COMMON STOCK" shall mean the common stock of the Company, par value
$0.0001 per share.
"EVENT OF DEFAULT" shall mean the occurrence of an event of default
under any Note or an event of default under the Security Agreement, which shall
in each case also be an event of default hereunder.
"MERGER AGREEMENT" shall mean that certain Agreement and Plan of Merger
by and among the Company, Citrus and the Target setting forth the terms and
conditions of the Target Acquisition.
"PREFERRED STOCK" shall mean any series of preferred stock of the
Company, par value $0.0001 per share, including, without limitation, the
Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock
and any other future series of preferred stock created by the Company.
"PURCHASER" shall mean each of the persons identified on the attached
SCHEDULE 1 and any such person who is assigned a Note or any portion thereof.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement dated as of June 13, 2001, by and among the Company, the Purchasers
and the other parties thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SEC" shall mean the United States Securities and Exchange Commission.
"STOCKHOLDERS AGREEMENT" shall mean the Stockholders Agreement dated as
of June 13, 2001, by and among the Company, the Purchasers and the other parties
thereto.
"TARGET" shall mean Ecometry Corporation, a Florida corporation.
"TARGET ACQUISITION" shall mean the acquisition of all of the capital
stock of the Target by the Company pursuant to a reverse subsidiary merger
whereby Citrus merges with and into the Target pursuant to the Merger Agreement.
"TERM" shall mean the period of time commencing on the date of issuance
of the Notes and ending at 5:00 p.m. Mountain Time on the date three years
following the date of issuance of the Notes.
ARTICLE II
THE NOTES
Section 2.01. PURCHASE AND SALE OF THE NOTES. Subject to the terms and
conditions of this Agreement, each Purchaser agrees, severally, to purchase at
Closing (as defined below) from the Company and the Company agrees to issue and
sell to each such Purchaser, a Note with a principal amount equal to the
principal amount listed opposite each such Purchaser's name on the attached
SCHEDULE 1 and in substantially the form of the Note attached hereto as EXHIBIT
A.
Section 2.02. CLOSING. The closing of the purchase and sale of the
Notes (the "CLOSING") shall take place at the offices of Xxxxxx Godward LLP, 000
Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000 on the date following the
satisfaction or waiver of the closing conditions set forth in Article III and
Article IV of this Agreement (the "CLOSING DATE"), or at such other place, time
and date as may be mutually agreed upon by the Purchasers and the Company. At
the Closing, the Company shall deliver to each Purchaser an executed Note, and
each Purchaser shall deliver to the Company the principal amount of such
Purchaser's Note in immediately available funds.
2
Section 2.03. DEFERRED ORIGINATION FEE. In addition to the interest
that the Company shall pay as set forth in the Notes, the Company shall pay to
each Purchaser a deferred origination fee equal to 3% of the principal amount of
such Purchaser's Note. Such deferred origination fee shall be due and payable by
the Company to each Purchaser, including interest thereon, on the maturity date
of such Purchaser's Note.
ARTICLE III
CONDITIONS TO THE OBLIGATIONS OF PURCHASERS
The obligation of each Purchaser to purchase and pay for such
Purchaser's Note is subject to the satisfaction, on or before the Closing Date,
of the following conditions:
Section 3.01. APPROVAL. The board of directors and stockholders of the
Company, to the extent required, shall have approved the execution, delivery and
performance of this Agreement, the Notes and the Security Agreement (as defined
below), and the transactions contemplated hereby and thereby, in accordance with
the provisions of all applicable laws and regulations, the Charter Documents and
the terms of all material contracts and agreements to which the Company or its
stockholders are parties.
Section 3.02. CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any governmental authority or any other
public or private third parties necessary or appropriate to consummate the
Closing and the other matters contemplated hereby shall have been obtained
(except for such as may be properly obtained subsequent to the Closing in the
reasonable opinion of the Purchasers).
Section 3.03. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Article V of this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date.
Section 3.04. EVENT OF DEFAULT. No Event of Default or event which with
the passing of time or giving of notice would constitute an Event of Default
shall have occurred and be continuing as of Closing or will result from the
purchase of the Notes or the Company's performance of its obligations hereunder.
Section 3.05. GRANT OF A SECURITY INTEREST. The Company shall have
executed and delivered to the Purchasers the Security Agreement granting the
Purchasers a perfected first priority security interest in all of the Company's
assets, substantially in the form of the security agreement attached hereto as
EXHIBIT B (the "SECURITY AGREEMENT"). The Company shall have (a) executed all
financing statements and (b) taken all other actions reasonably requested by the
Purchasers necessary to perfect the Purchasers' security interest in the
Company's assets.
Section 3.06. PREEMPTIVE RIGHTS WAIVER. The Company shall have received
a waiver of any applicable preemptive rights, rights of first refusal and
similar rights in connection with the
3
issuance of the Notes hereunder, unless such rights have been exercised by the
parties holding such rights or such rights have expired prior to Closing.
Section 3.07. TARGET ACQUISITION. The Target Acquisition shall have
closed, and, in connection with therewith, all conditions to the obligation of
the Company to consummate the Target Acquisition set forth in Section 6.3 of the
Merger Agreement shall have been fulfilled at or prior to the closing thereof.
Section 3.08. SBIC MATTERS. The Company shall deliver to The Xxxxx
Partnership III, SBIC LP a letter, in substantially the form of the letter
attached hereto as EXHIBIT C, relating to the Company's compliance with certain
matters related to investments in the Company by a small business investment
company that is licensed by the U.S. Small Business Administration.
Section 3.09. DELIVERIES. The Company shall have delivered to
Purchasers the following:
(a) a certificate, as of the most recent practical date, of
the Secretary of State of the State of Delaware as to the Company's good
standing and a certificate, as of the most recent practical date, of the
Secretary of State of each jurisdiction where the Company is qualified to do
business as to the Company's good standing in such jurisdiction;
(b) a certificate of the Secretary of the Company dated as of
the Closing Date, certifying (i) the incumbency and specimen signatures of all
officers of the Company executing the Financing Documents (as defined below) on
behalf of the Company and all other documents executed and delivered in
connection therewith and a certification of another officer of the Company as to
the incumbency and signature of the Secretary of the Company; (ii) that attached
thereto is a true, correct and complete copy of the Company's Certificate of
Incorporation, in effect as of the Closing Date; (iii) that attached thereto is
a true, correct and complete copy of the Company's Bylaws, in effect as of the
Closing Date; and (iv) that attached thereto is a true, correct and complete
copy of the resolutions or consents of the board of directors of the Company
authorizing and approving the transactions contemplated by the Financing
Documents; and
(c) a certificate of the Chief Executive Officer of the
Company dated as of the Closing Date, certifying the fulfillment of all of the
conditions to Purchasers' obligations under this Agreement, as set forth in this
Article III.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company to issue each Purchaser a Note is subject
to the satisfaction, on or before the Closing Date, of the following condition:
Section 4.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article VI shall be true and correct in all material
respects on and as of the Closing
4
Date with the same effect as though such representations and warranties had been
made on and as of such date.
Section 4.02. THIRD PARTY CONSENTS AND APPROVALS. All consents,
approvals and actions of, filings with and notices to any governmental authority
or any other public or private third parties to consummate the Closing and the
other matters contemplated hereby shall have been obtained.
Section 4.03. TARGET ACQUISITION. The Target Acquisition shall have
closed, and, in connection with therewith, all conditions to the obligation of
the Company to consummate the Target Acquisition set forth in Section 6.3 of the
Merger Agreement shall have been fulfilled at or prior to the closing thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the "Schedule of Exceptions" attached hereto as
EXHIBIT D, the Company represents and warrants, which representations and
warranties shall survive the execution and delivery hereof, to each Purchaser as
follows:
Section 5.01. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company is duly qualified
to transact business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the assets, liabilities, financial condition or operations of
the Company (a "Material Adverse Effect"). The Company has the corporate power
and authority to carry on the business of the Company as now conducted and as
proposed to be conducted. Except as set forth in SCHEDULE 5.01, the Company does
not own, directly or indirectly, any equity or other ownership interest in any
other corporation, limited partnership, limited liability company or other
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
Section 5.02. CAPITALIZATION. Immediately prior to the Closing, the
authorized capital stock of the Company shall consist of (a) ____________ shares
of Common Stock, of which ______________ shares will be issued and outstanding;
and (b) ________________ shares of Preferred Stock, (i) _____________ shares of
which will be designated Series A Convertible Preferred Stock, of which
_________________ shares will be issued and outstanding and (ii) shares of which
will be designated Series B Convertible Preferred Stock, none of which shares
will be issued and outstanding. The capitalization of the Company and the
ownership of the issued shares of capital stock of the Company as of the Closing
Date are set forth on the attached SCHEDULE 5.02. All of the issued and
outstanding shares of the Company's capital stock have been duly authorized,
validly issued, fully paid and non-assessable. All of the issued and outstanding
shares of the Company's capital stock have been issued in accordance with all
Federal and state securities laws. Except as set forth on the attached SCHEDULE
5.02 and as contemplated by the Financing Documents, there are no outstanding or
authorized options,
5
warrants, rights, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities or other commitments,
contingent or otherwise, relating to the capital stock of the Company, pursuant
to which the Company is or may become obligated to issue and sell shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of the
Company.
Section 5.03. AUTHORIZATION, ENFORCEABILITY AND PREEMPTIVE RIGHTS. All
corporate action on the part of the Company, board of directors and officers
necessary for the authorization, execution and delivery of this Agreement, the
Notes, and the Security Agreement (collectively, the "FINANCING DOCUMENTS") and
the performance of all of the Company's obligations under the Financing
Documents, including, but not limited to, the sale and issuance of the Notes and
the grant of a security interest in all of the Company's assets, has been taken
or will be taken prior to the Closing. The Financing Documents, when executed
and delivered by the Company, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms, except
as limited by (a) laws of general application relating to specific performance,
injunctive relief or other equitable remedies, and (b) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to creditors'
rights generally. The sale and issuance of the Notes is not and will not be
subject to any preemptive rights, rights of first refusal or similar rights that
have not been properly waived or complied with.
Section 5.04. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of the Charter Documents, any agreements
between or among the stockholders of the Company or any contract or agreement or
any provision of any contract or agreement or other restriction of any kind to
which the Company is a party or by which it is bound or to which its properties
or assets are subject, other than violations or defaults that have either been
waived or in the aggregate do not and will not have a Material Adverse Effect on
the Company. Neither the execution, delivery or performance of the Financing
Documents nor the consummation of any of the transactions contemplated thereby,
including, but not limited to, the sale and issuance of the Notes and the grant
of a security interest in all of the Company's assets, (a) will result in any
violation of the Charter Documents or any agreements between or among the
stockholders of the Company; (b) will violate or conflict with or result in a
default under any contract or agreement or any provision of any contract or
agreement or other restriction of any kind to which the Company is a party or by
which it is bound or to which its properties or assets are subject, other than
violations or conflicts that have either been waived or in the aggregate do not
and will not have a Material Adverse Effect on the Company; (c) will cause any
acceleration of maturity of any obligation or loan to which the Company is a
party or by which it is bound or with respect to which it is an obligor or
guarantor; (d) will result in the creation or imposition of any lien, claim,
charge, restriction or encumbrance of any kind whatever, other than in favor of
a Purchaser, upon or give to any other person any interest or right, including
any right of termination or cancellation, in or with respect to any of the
material properties, assets, business, agreements or contracts of the Company;
or (e) to the Company's knowledge, will conflict with or constitute a violation
of any provision of local, state, federal or foreign law, rule or regulation,
other than conflicts or violations that in the aggregate do not and will not
have a Material Adverse Effect on the Company.
6
Section 5.05. FINANCIAL STATEMENTS.
(a) The Company has delivered to the Purchasers its audited
balance sheet as of December 31, 2000 and its statements of operations, cash
flows and changes in stockholders' equity for the period then ended (the
"Audited Financial Statements"). Except for any exceptions reflected in the
Xxxxxx Xxxxxxxx LLP audit report, the Audited Financial Statements (including
the notes thereto) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as of
such date and the results of operations of the Company for such period, are
correct and complete in all material respects and are consistent with the books
and records of the Company (which books and records are correct and complete).
(b) The Company has delivered to the Purchasers its unaudited
balance sheet as of December 31, 2001 (the "Unaudited Balance Sheet") and its
unaudited statements of income and cash flows for the fiscal year then ended
(together with the Unaudited Balance Sheet, the "Unaudited Financial
Statements"). The Unaudited Balance Sheet fairly presents in all material
respects the financial position of the Company as of its date, and the other
statements included in the Unaudited Financial Statements fairly present in all
material respects the results of operations and cash flows, as the case may be,
of the Company for the periods therein set forth, in each case in accordance
with generally accepted accounting principles except as otherwise stated therein
and except for the omission of footnote disclosures and, to the extent
consistent with generally accepted accounting principles, normally recurring
year-end audit adjustments; PROVIDED that the Unaudited Financial Statements may
include alternative accounting treatment for certain previously acquired
intangible assets and for the capitalization of certain software assets.
(c) The Company has no material liabilities not disclosed in
the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to December 31, 2001, which, either in any
individual case or in the aggregate, have not and will not have a Material
Adverse Effect on the Company. Except as disclosed in the Financial Statements,
the Company is not a guarantor of any indebtedness of any other entity or
person.
Section 5.06. ASSETS. The Company has good and marketable title to its
owned properties and assets, including the properties and assets reflected in
the Financial Statements, and good leasehold title to all its leasehold
interests, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (a) liens resulting from current taxes not yet due and
payable, (b) minor liens and encumbrances which do not materially detract from
the value of the property subject thereto or materially impair the operations of
the Company, and (c) those that have otherwise arisen in the ordinary course of
business. The Company does not own any real property.
Section 5.07. INTELLECTUAL PROPERTY. To the best of its knowledge, the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
other proprietary rights and processes
7
(collectively, the "INTELLECTUAL PROPERTY") necessary to its business as now
conducted, without any known infringement of the rights of others. Except as set
forth in SCHEDULE 5.07, there are no outstanding options, licenses, or
agreements of any kind relating to the Company's Intellectual Property, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the Intellectual Property of any other person or entity
other than such licenses or agreements arising from the purchase of "off the
shelf" or standard products. To the Company's knowledge, no product or service
marketed or sold, or currently proposed to be marketed or sold, and no
Intellectual Property rights licensed or currently proposed to be licensed by
the Company, violates or infringes, or will violate or infringe, any license or
Intellectual Property rights of a third party. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as presently proposed, would violate any Intellectual Property of any
other person or entity, and, the Company has no knowledge of any basis therefor.
To the Company's knowledge, at no time during the conception or reduction to
practice of any of the Company's Intellectual Property was any developer,
inventor or other contributor to such Intellectual Property operating under any
grants from any governmental entity or agency or private source, performing
research sponsored by any governmental entity or agency or private source, or
subject to any employment agreement or invention assignment or nondisclosure
agreement or other obligation with any third party that could reasonably be
expected to adversely affect the Company's rights in such Intellectual Property.
To its knowledge, the Company is not aware that any of its officers, employees,
consultants, contractors or shareholders is obligated under any contract,
including licenses, covenants or commitments of any nature, or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company's business as proposed to be conducted or that would
prevent such officers, employees, consultants, contractors or shareholders from
assigning inventions to the Company. The Company is not obligated to make any
payments by way of royalties, fees or otherwise to any owner or licensor of any
Intellectual Property, with respect to the use thereof or in connection with the
conduct of its business or otherwise, except pursuant to licenses or agreements
arising from the purchase of "off the shelf" or standard products. The Company
is not aware of any violation by a third party of any of the Company's
Intellectual Property.
Section 5.08. MATERIAL CONTRACTS. Except as otherwise incurred as part
of the transactions contemplated hereby or as set forth on SCHEDULE 5.08, the
Company has no, and is not bound by any, contract, agreement, lease, commitment,
or proposed transaction, judgment, order, writ or decree, written or oral,
absolute or contingent, other than (a) contracts for the purchase of supplies
and services that (i) were entered into in the ordinary course of business, (ii)
do not involve more than $10,000 and (iii) do not extend for more than one year
beyond the date hereof; or (b) contracts terminable at will by the Company on no
more than 30 days' notice without cost or liability to the Company and that (i)
do not involve any employment or consulting arrangement and (ii) are not
material to the conduct of the Company's business. Each contract disclosed or
required to be disclosed on SCHEDULE 5.08 (collectively, the "MATERIAL
CONTRACTS") is a legal, valid and binding obligation of the Company, enforceable
in accordance with its terms in all material respects, and true and correct
copies of the Material Contracts have been provided to the Purchasers that have
requested such. To the Company's knowledge, no
8
other party to a Material Contract is currently in breach of any of the material
terms thereof. To the Company's knowledge, there is no default or event that,
with notice or lapse of time, or both, would conflict with or constitute a
breach by the Company of any Material Contract or would result in the creation
or imposition of any lien or encumbrance on the Company, or any of the Company's
property. The Company has not received notice that any party to any Material
Contract intends to cancel, amend or terminate any such Material Contract.
Section 5.09. LITIGATION. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court or
governmental agency, nor, to the Company's knowledge, is there any threat
thereof, which, either in any case or in the aggregate, reasonably would be
expected to result in a Material Adverse Effect on the Company, or in any
material impairment of the Company's right or ability to carry on its business
as now conducted or as proposed to be conducted, or in any material liability on
the part of the Company, and none which questions the validity of the Financing
Documents or any action taken or to be taken in connection herewith.
Section 5.10. COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the
Company is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would reasonably be expected to have a Material
Adverse Effect on the Company. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which would reasonably be expected to have a
Material Adverse Effect on the Company and believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted.
Section 5.11. CHARTER; MINUTE BOOK. The Charter Documents are in the
form previously provided to Purchasers or their attorneys or agents. The
Company's minute books made available to Purchasers or their attorneys or agents
contain a complete summary of all meetings of directors and stockholders since
the time of incorporation and reflect all transactions referred to in such
minutes accurately in all material respects.
Section 5.12. INVESTMENT COMPANY ACT. The Company is not an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 5.13. DISCLOSURE. The Financing Documents do not, and the
documents executed by the Company or otherwise furnished by the Company to
Purchasers in connection with the transactions contemplated thereby will not,
contain any untrue statement of a material fact or, to the Company's knowledge,
omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
9
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser, severally and not jointly, represents and warrants,
which representations and warranties shall survive the execution and delivery
hereof, to the Company with respect to itself as follows:
Section 6.01. PURCHASE ENTIRELY FOR OWN ACCOUNT; AUTHORITY. The Note to
be acquired by Purchaser will be acquired for investment for Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same.
Purchaser has not been formed for the specific purpose of acquiring the Note.
Purchaser has the full right, power and authority to enter into and perform
Purchaser's obligations under this Agreement. All action on Purchaser's part
required for the lawful execution and delivery of this Agreement have been taken
or will be effectively taken prior to the Closing. Upon their execution and
delivery, this Agreement will constitute a valid and binding obligation of
Purchaser enforceable in accordance with its terms, except as limited by (a)
laws of general application relating to specific performance, injunctive relief
or equitable remedies, and (b) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to creditor's rights
generally.
Section 6.02. RESTRICTED SECURITIES. Purchaser understands that the
Note has not been, and will not be, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act that depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of Purchaser's representations as
expressed herein. Purchaser understands that the Note is a "restricted security"
under applicable federal and state securities laws and that, pursuant to these
laws, Purchaser must hold the Note indefinitely unless they are registered with
the SEC and qualified by state authorities, or an exemption from such
registration and qualification requirements is available.
Section 6.03. NO PUBLIC MARKET. Purchaser understands that no public
market now exists for any of the securities issued by the Company and that the
Company has made no assurances that a public market will ever exist for the
Note.
Section 6.04. SUBSTANTIAL RISK. The Note is highly speculative in
nature, and Purchaser in this offering faces a substantial risk that Purchaser
will lose all or part of its investment, or that Purchaser's investment will
generate an inadequate return.
Section 6.05. LEGENDS. Purchaser understands that the Note and any
securities issued in respect thereof or exchange therefore may bear one or all
of the legends in substantially the following form:
(a) THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE
10
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
(b) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT.
(c) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the instruments represented by the
certificate so legended.
Section 6.06. ACCREDITED INVESTOR. Purchaser (a) is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act; (b) has the ability to bear the economic risks of Purchaser's
prospective investment, including a complete loss of Purchaser's investment in
the Note; and (c) has not been offered the Note by any form of advertisement,
article, notice or other communication published in any newspaper, magazine, or
similar media or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by such media.
Section 6.07. REVIEW OF THE COMPANY. The Company has delivered to each
Purchaser or its counsel, copies of all documents and other information
reasonably requested by such Purchaser in connection with its due diligence
review of the Company.
ARTICLE VII
COVENANTS OF THE COMPANY
The Company covenants and agrees with each Purchaser that so long as
any amount is outstanding under such Purchaser's Note, then, unless the holders
of at least 90% of the aggregate principal amount of the Notes then outstanding
shall otherwise consent in writing:
Section 7.01. USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Notes for completing the Target Acquisition and general working
capital purposes arising thereafter.
Section 7.02. NEGATIVE COVENANTS. The Company shall not take any of the
following actions:
(a) amend any of the Financing Documents or otherwise alter or
change the rights, preferences or privileges of the Notes;
11
(b) create, by reclassification or otherwise, any new debt
security having rights, preferences or privileges senior to or on parity with
the Notes, unless, in connection therewith, not less than __% of the proceeds of
such new debt security is utilized to repay the outstanding principal amount and
accrued interest thereon;
(c) declare or pay any dividends on or other distribution with
respect to any shares of the Company's capital stock, except for the payment in
kind dividends payable to the holders of the Series A Convertible Preferred
Stock in accordance with Section 5.2(b)(i) of the Company's Certificate of
Incorporation;
(d) redeem or repurchase any shares of the Company's capital
stock or other right to purchase such capital stock, other than a redemption or
repurchase upon the termination of an employment, consulting or other
relationship with the Company;
(e) (i) merge with or into or consolidate with any other
corporation, person or entity or engage in any statutory share for share
exchange, except for the Target Acquisition, (ii) sell or otherwise dispose of
all or substantially all of the Company's properties or assets, or (iii)
dissolve, liquidate or wind up the Company;
(f) make any loans or incur any indebtedness or other
liabilities outside the ordinary course of business that are in the aggregate in
excess of $100,000, except as provided for in this Agreement; or
(g) enter into any binding agreement to do any of the
foregoing.
Section 7.03. CONFIDENTIAL INFORMATION AND PROPRIETARY RIGHTS
AGREEMENT. The Company shall cause each of its current and future employees and
consultants to enter into the Company's standard form confidential information
and proprietary rights agreement.
Section 7.04. POST CLOSING COVENANT. The Company shall cause the Target
to deliver to the Purchasers within one business day after the Closing of the
Target Acquisition a guaranty agreement to be effective immediately after the
closing of the Target Acquisition, in form reasonably satisfactory to the
Purchasers, guarantying the Company's obligations hereunder, and a security
agreement, in form reasonably satisfactory to the Purchasers, granting the
Purchasers a first priority security interest in all of the Target's assets, or
at Purchasers' election the Target shall otherwise become a direct obligor under
the Notes.
ARTICLE XIII
RESTRICTIONS ON TRANSFER
Each Purchaser agrees not to make any disposition of all or any portion
of such Purchaser's Note unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
12
(b) (i) The transferee has agreed in writing to be bound by
the terms of this Agreement, (ii) such Purchaser shall have notified the Company
of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (iii)
if reasonably requested by the Company in compliance with the last sentence of
this subparagraph, such Purchaser shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration under the Securities Act. It is agreed
that the Company will not require opinions of counsel for transactions made
pursuant to Rule 144, except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Purchaser that is (A) a partnership transferring to its
partners or former partners in accordance with partnership interests or to an
affiliate of such partnership, (B) a corporation transferring to a wholly-owned
subsidiary or a parent corporation that owns all of the capital stock of the
Purchaser, (C) a limited liability company transferring to its members or former
members in accordance with their interest in the limited liability company or to
an affiliate of such limited liability company, or (D) an individual
transferring to the Purchaser's family member or trust for the benefit of an
individual Holder; PROVIDED that in each case the transferee will be subject to
the terms of this Agreement to the same extent as if he were an original Holder
hereunder.
ARTICLE IX
TERMINATION
Section 9.01. TERMINATION. This Agreement may, by notice given on or
prior to the Closing Date, in the manner hereinafter provided, be terminated and
abandoned at any time prior to the Closing Date:
(a) by the Purchasers if there has been a material
misrepresentation or a material default or breach by the Company with respect to
its representations in this Agreement or any of the other Financing Documents or
the due and timely performance of any of the Company's covenants and agreements
contained in this Agreement or in any other Financing Document, and any such
misrepresentation, default or breach shall not have been cured within 10
business days after receipt by the Company of notice specifying such
misrepresentation, default or breach;
(b) by the Company if there has been a material
misrepresentation or a material default or breach by the Purchasers with respect
to their representations in this Agreement or any of the other Financing
Documents or the due and timely performance of any of the Purchasers' covenants
and agreements contained in this Agreement or in any other Financing Document,
and any such misrepresentation, default or breach shall not have been cured
within 10 business days after receipt by the Company of notice specifying such
misrepresentation, default or breach; or
(c) by either the Purchasers or the Company if the Closing has
not occurred on or before the earlier of (i) the termination date of the Merger
Agreement or (ii) June 30, 2002.
13
Section 9.02. EFFECTS OF TERMINATION. In the event this Agreement is
terminated pursuant to Section 9.01, all further obligations of the parties
hereunder shall terminate, except that nothing in this Section 9.02 shall
relieve any party hereto of any liability for breach of this Agreement.
ARTICLE X
PREPAYMENT
The unpaid principal amount of the Notes may be prepaid in whole or in
part at any time or times prior to the expiration of the Term without premium or
penalty upon 10 days' prior written notice to each Purchaser. Each prepayment
shall be applied first to the payment of all interest and other amounts accrued
under the Notes on the date of any such prepayment, and the balance of any such
prepayment shall be applied to the principal amount thereunder.
ARTICLE XI
EVENTS OF DEFAULT
In case any one or more Events of Default shall occur, any Purchaser
may proceed, in accordance with and subject to the terms of the Security
Agreement, to protect and enforce its rights by initiating a suit in equity,
action at law, or other appropriate proceedings, whether for the specific
performance of any agreement contained herein, in the Note or in the Security
Agreement, or for an injunction against a violation of any of the terms or
provisions hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law.
ARTICLE XII
MISCELLANEOUS
Section 12.01. NOTICES. Any notice, request, demand, statement,
authorization, approval, consent or acceptance made under the Financing
Documents shall be in writing and shall be (a) hand delivered, (b) sent by
Federal Express or other reputable overnight courier service, (c) or sent by
registered or certified mail, return receipt requested, postage prepaid and
shall be deemed given (x) when received if hand delivered, sent by Federal
Express, or other reputable overnight courier service, or (y) three business
days after being postmarked and addressed as follows if sent by registered or
certified mail, return receipt requested. Any notice, request, demand,
statement, authorization, approval, consent or acceptance shall be sent to the
following addresses:
If to the Company:
Syngistix, Inc.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
14
with a copy (which shall not constitute notice) to:
Xxxxxx Godward LLP
000 Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
If to a Purchaser, to Purchaser's address as set forth on the attached
SCHEDULE 1,
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Each party may designate a change of address by notice to the other parties,
given as provided above at least 15 days before such change of address is to
become effective.
Section 12.02. DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under the Financing Documents,
shall impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or in any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character on any Purchaser's part of any breach, default or
noncompliance under the Financing Documents or any waiver on such party's part
of any provisions or conditions of the Financing Documents must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies under the Financing Documents, by law or otherwise
afforded to any party shall be cumulative and not alternative.
Section 12.03. SUCCESSORS AND ASSIGNS. All agreements, covenants,
conditions and provisions of this Agreement shall inure to and bind the
successors and assigns of the Company, provided, however that the Company may
assign this Agreement or any interest herein only upon obtaining the prior
written consent of the Purchasers. All agreements, covenants, conditions and
provisions of this Agreement shall inure to and bind the successors and assigns
of the Purchasers, provided, however that each Purchaser may assign this
Agreement or any interest herein (a) to an affiliate of such Purchaser without
obtaining the consent of any party, or (b) to any other person who is not an
affiliate of such Purchaser only upon obtaining the prior written consent of the
other Purchasers.
Section 12.04. CONSTRUCTION OF AGREEMENT. The titles and headings of
the Sections of this Agreement have been inserted for convenience of reference
only and are not intended to summarize or otherwise describe the subject matter
of such Sections and shall not be given any consideration in the construction of
this Agreement.
15
Section 12.05. MODIFICATION. This Agreement may not be modified,
amended or terminated, except by an agreement in writing executed by both (a)
the Company, and (b) the Purchasers.
Section 12.06. ENTIRE AGREEMENT. The Financing Documents, the Exhibits
and Schedules thereto and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof (superceding all prior agreements and
understandings, written or oral, among the parties with respect to the subject
matter) and no party shall be liable or bound to any other party in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth therein.
Section 12.07. SEVERABILITY. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
Section 12.08. GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado.
Section 12.09. COUNTERPARTS. This Agreement may be delivered via
facsimile and may be executed in any number of counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.
Section 12.10. TIME OF ESSENCE. Time is of the essence of this
Agreement and all of its provisions.
Section 12.11. FURTHER CONSENT. The Company acknowledges that nothing
in this Agreement or any related document or transaction is intended to or shall
affect any rights of any Purchaser that is also a holder of Preferred Stock as a
holder of such Preferred Stock.
Section 12.12. ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision
of this Agreement is intended, nor shall it be interpreted, to provide or create
any third party beneficiary rights or any other rights of any client in any
other person.
Section 12.13. NO BROKERS. Each party hereto represents and warrants
that no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any broker's
or finder's fee or any other commission directly or indirectly in connection
with the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 12.13 being
untrue.
Section 12.14. FURTHER ASSURANCES. The Company, at its expense, will
execute and deliver promptly to each Purchaser upon request all such other and
further reasonable documents, agreements and instruments in compliance with or
pursuant to its covenants and agreements herein, and will make any recordings,
file any notices, and obtain any consents as reasonably requested from time to
time by the Purchasers.
* * * * * *
16
IN WITNESS WHEREOF, the undersigned have executed this Note Purchase
Agreement to be effective as of the date first written above.
COMPANY:
SYNGISTIX, INC.
By:
------------------------------------------------
Print Name:
----------------------------------------
Title:
---------------------------------------------
PURCHASERS:
THE XXXXX PARTNERSHIP III, SBIC LP
By: Xxxxx Ventures SBIC Limited Liability Company, its general partner
By:
------------------------------------------------
Print Name:
----------------------------------------
Title:
---------------------------------------------
CORE TECHNOLOGY FUND IV, LLC
By:
------------------------------------------------
Print Name:
----------------------------------------
Title:
---------------------------------------------
------------------------------------
[-----------]
17
SCHEDULE 1
LIST OF PURCHASERS
PRINCIPAL
Name and Address: Amount:
----------------- -------
THE XXXXX PARTNERSHIP III, SBIC LP $ 1,600,000
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Manager
CORE TECHNOLOGY FUND IV, LLC $ 8,400,000
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
TOTALS: $10,000,000
18
EXHIBIT A
FORM OF NOTE
19
EXHIBIT B
FORM OF SECURITY AGREEMENT
20
EXHIBIT C
FORM OF SBIC COMPLIANCE LETTER
21
EXHIBIT D
SCHEDULE OF EXCEPTIONS
22
NOTE PURCHASE AGREEMENT
DATED AS OF ____________ __, 2002
